ESI reports steady progress in Q4

ESI just reported revenue for the fourth quarter and fiscal year that ended on January 31 — and the news is good. Recall that ESI’s revenue is really backweighted, with the bulk of renewals coming in Q4 and skewing result for earlier periods each year. With that preamble:

Q4 revenue was €58 million, up 5% as reported and up nearly 5% in constant currencies (cc). Revenue from recent acquisitions was €1.5 million, “with the bulk deriving from ESI ITI GmbH”.

In Q4, license revenue was €49 million, up 3% as reported and up 2% cc. This was a bit lower than expected because one large deal moved from Q4 into Q3, as previously reported.

Services revenue was €9 million, up 20% as reported and up 20% cc — but note that it’s a small number and a 20% increase is €1.5 million or a couple of large-ish engagements

For the fiscal year, total revenue was €141 million, up 13% as reported and up 11% cc. License revenue was €108 million, up 12% as reported, while service revenue was €32 million, up 17% as reported and up 15%cc

ESI continued its acquisitive ways during the fiscal year, so organic growth becomes relevant. ESI’s reported numbers indicate that total organic, constant currency growth was 6% (so perhaps a point or two more as reported), with licenses up 5% and services up 9%. For the year, acquisitions contributed €6.4 million, again mainly from ITI

CEO Alain de Rouvray commented that growth in value-added services “reflect[s] the growing demand among industrial companies to support their transformation towards the ‘Industry of the Future’. This represents an endorsement of ESI’s “Product Performance Lifecycle” (PPL) approach … based on the transformation of the ‘Virtual Prototype’ into its data driven “Hybrid Virtual Twin”, which largely benefits from the integration of the numerous innovative technologies recently acquired.”

On a geo basis, Dr. de Rouvray commented that licensing growth was “particularly robust in Asia”, as revenue of €55 million was up 22% due to “healthy” performance in China and India. Revenue from Europe was €63 million, up 10% and from Americas was €23 million, down 5%.

ESI doesn’t offer much color in these earnings statements, but did say that it has renewed strategic agreements with key accounts Volkswagen and Renault-Nissan and that its diversification strategy continues, booking services engagements in its Aeronautical and Aerospace’ segment, which could/should lead to follow-on license sales.

Today’s report is a bit below analyst consensus as captured by the Financial Times; they showed a forecast of €143.6 million for the fiscal year just ended.